JAMB 1988 · UME · Q7

A taxpayer is allowed $\frac18$ of his income tax-free and pays $20\%$ on the remainder. If he pays ₦490.00 tax, what is his income?

Worked solution (try it first)

$\frac18$ of his income $I$ is tax-free, so he is taxed on the other $\frac78$ of it.
The tax is $20\%$ of that: $0.2 \times \frac78 I = 490$ , which is $\frac{7}{40}I = 490$ .
Multiply both sides by $\frac{40}{7}$ : $I = 2800$ .
His income is ₦2,800.00, option C.